Frax Finance Founder Claims Inside Job at X Resulted in Account Hack

Sam Kazemian, founder of Frax Finance, claimed that an internal function at Company X was responsible for the hacking of the project's official account.

The hack, which occurred on June 1, resulted in the decentralized stablecoin protocol behind FRAX USD losing access to its X account.

Frax Financial Hack

In a telegram post dated June 3, Kazemian Mentioned The Frax Finance team is “reasonably certain” they have identified the perpetrator, described as a “serial fraudster” known to blockchain investigator ZachXBT.

Kazemian stressed: “We will do our best to bring this person to justice.” He explained that the hack was not due to any security vulnerabilities or phishing attacks targeting the Frax Finance team. “This was an inside job,” he stressed.

The incident occurred on June 1, when Frax Finance “If anyone has a direct line to Account X/Customer Service, please DM me,” he posted in the wake of the hack.

If anyone has a direct line to Account X/Customer Service, please DM me, @fraxfinance X's account has been hacked and it appears to be within functionality or social engineering within X due to no password reset or other issues within Frax itself. Please stay safe and don't click any X links!

– Sam Kazemian (¤, ¤) (@samkazemian) May 31, 2024

X usually advises users to change their passwords when they discover that an account has been compromised. However, Kazemian claimed that the passwords were not tampered with and that there were no internal security issues within Frax Finance that could have led to the hack. Instead, he pointed to possible social engineering and insider involvement with X.

As of now, Frax Finance's X account remains active, but no new posts have appeared since the hack. So far, neither Company X nor its CEO, Elon Musk, have made any official comments addressing the hack.

One X user Comment about the situation, emphasizing the need to improve crypto authentication features on X to maintain its status as the “home of crypto.”

Internal kickbacks linked to a pump-and-dump scheme

This incident with Frax Finance is the latest in a series of hacks targeting cryptocurrency projects, allegedly attributed to internal actions at X. In late May, a cryptocurrency trader known as GCR reported a similar hack of its X account.

“I was notified two months ago by someone affiliated with Twitter that bribes were offered to gain access to my account, and security was subsequently beefed up. But there can be no security if X employees take money for administrative access,” GCR stated.

According to GCR, the attackers took control of his account through bribery and used it to promote a pump-and-dump scheme involving ORDI and LUNA2.

1/ Investigate how @sol The meme coin team ($CAT) is connected to @GCRClassic Breakout from last night.

Minutes before the hack, an address associated with them opened $2.3 million worth of ORDI and $1 million worth of ETHFI buy trades on Hyperliquid.

Let's dig deeper. pic.twitter.com/009BdPBfM1

– ZackXPT (@ZackXPT) May 27, 2024

ZachXBT later suggested that the developers behind the Solana-based CAT coin may have been involved in this hack. However, it remains to be confirmed whether the same group is behind the attack on Frax Finance.